The government sold a 2.5% stake in Larsen & Toubro (L&T) on Wednesday, raising about Rs4,000 crore as part of its disinvestment programme of Rs72,500 crore for the current fiscal year.

The government sold a 2.5% stake in Larsen & Toubro (L&T) on Wednesday, raising about Rs4,000 crore as part of its disinvestment programme of Rs72,500 crore for the current fiscal year.(Reuters)

The government sold a 2.5% stake in Larsen & Toubro (L&T) on Wednesday, raising about Rs4,000 crore as part of its disinvestment programme of Rs72,500 crore for the current fiscal year. The stake, held through the government-owned Specified Undertaking of Unit Trust of India (Suuti), was sold through block deals in the stock market. On November 4, 2016, the government had sold a 1.62% stake in the engineering company via bulk trade to fetch Rs2,096 crore. Suuti owned a 6.68% stake in L&T as of the end of March. The share price of L&T on Wednesday closed at 1,752.50, up 0.11%, on BSE. The BSE Sensex closed at 31,283.64, down 0.04%. Including the latest stake sale in L&T, the Centre has raised Rs4,602 crore so far, or about 9% of the current year’s target. The government’s 2017-18 divestment target is 58% higher than the receipt of Rs46,247 crore in 2016-17. Apart from PSU listings, sale of the government’s SUUTI stakes and further pruning of Centre’s stakes in several PSUs like NTPC and PFC, buybacks of shares by PSUs and a proposed new PSU ETF are expected to boost the disinvestment revenue this year. The Centre plans to raise about Rs15,000 crore in 2017-18 from strategic disinvestment, which includes sale of minority stakes in companies held by SUUTI as well as privatisation.

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Sale of small portions of Suuti holdings in L&T and ITC in 2016-17 helped the government raise Rs10,779 crore, which was 23% of the total disinvestment receipts during the year. Receipts from Suuti stake sales could be even higher in 2017-18, analysts say. Through Suuti, government holds small stakes in as many as 51 companies, including blue chip private firms. The department of investment and public asset management has selected six merchant bankers for advising Suuti on the stake sale of above mentioned companies under an arrangement that three bankers are always available for any transaction which Suuti wants to execute. This has provided flexibility to Suuti to transact in the strategic holding at a short notice without hammering of these shares in market.